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How Deep is Consumer Demand for Fair Trade?

coffee_displayby Burton Bollag

The most recent data show that the sale of Fair Trade Certified products continued growing strongly last year—an expansion that has been slowed but by no means halted by the current economic recession. This both heartens Fair Trade advocates and suggests future growth in the amounts and range of products that consumers are willing to pay more for in the name of social justice.

While the limits to that expansion are hard to predict, several indices–sales data, an international survey of consumer opinions, and the recent large-scale involvement of major corporate retailers—suggest the phenomenon has considerably further to go before exhausting its potential for growth.

In 2008, $1.1 billion of Fair Trade products were sold in the United States. That compares to considerably less than $100 million in 1996, the year TransFair USA was founded as the only independent certifier of Fair Trade products sold in the country.

Despite the onset of the deepest economic recession in two generations, US sales in 2008 grew by 10 percent over the previous year. This should “put to rest any thought that Fair Trade Certified is a boom-time luxury,” said Paul Rice, TransFair’s chief executive, in a written statement. Sales are expected to expand further this year.

Globally, the sale of Fair Trade products grew 22 percent in 2008 to $4.3 billion.

In April the results of the first international survey of consumers’ attitudes on the subject were released. The survey, commissioned by Fairtrade Labelling Organizations International (FLO), the organization that coordinates labelling at an international level from its headquarters in Bonn, Germany, questioned 1,000 randomly selected consumers in each of 15 rich countries.

Opinions in the US and the other countries were remarkably similar. Over half of those questioned said they have rewarded companies for being social responsible. 57 percent of Americans (and 60 percent of all respondents from all 15 countries) said they were willing to pay at least five percent more for Fair Trade Certified products.

Yet the reduced growth of Fair Trade sales in the United States in 2008—the 10 percent hike was smaller than in previous years—shows the movement is vulnerable to larger economic trends. Shopping in the produce section of a Safeway supermarket in Washington DC one recent afternoon, Carolyn Stouamire, a 52-year old financial assistant, reflected the ambivalence that many people may feel. She said she knew about Fair Trade, and could accept slightly higher prices for bananas or other products if the premium goes to community development projects for small farmers growing the food.

But she added, “with the economy going the way it is, it’s hard to pay more.”

Still, merchants have felt a strong enough demand among their customers that more and more major retailers are adopting or expanding Fair Trade lines. “The entire spectrum of retail stores … are charging ahead to try to offer Fair Trade products,” says Michael E. Conroy, an economist and senior Fair Trade organizer.

“Both Whole Foods and Walmart are pressuring TransFair USA to expand the range of products with Fair Trade certification,” says Conroy. He adds that FLO recently responded by relaxing its rules to allow TransFair USA to set temporary standards for new products.

Companies often like to paint their adoption of Fair Trade products as a sign of corporate social responsibility. But Susan Koehler, Senior Manager of corporate communications at Sam’s Club, the membership-only retail warehouse club of Walmart, adds that carrying Fair Trade products before competitors do can bring a marketing advantage. The move is “an opportunity for us to be different in the market place.”

Sam’s Club began carrying Fair Trade coffee in 2006, two years before Walmart did. Sam’s Club officials explain their earlier adoption of the item by the fact that the better-educated, more affluent customers they cater to tend to be more interested in Fair Trade.

Since starting with coffee, Sam’s Club has expanded it selection of Fair Trade products to about a dozen items including bananas and wine—a wider selection than is yet available at Walmart. Sam’s Club officials say they expect to expand both the volume and selection further, but add they have no way of knowing how far that expansion will go.

Shawn Baldwin, Sam’s Club vice president of fresh merchandising, says that some of his colleagues predict customer demand for the Fair Trade line may go the way of demand for organically-produced foods. Five years ago, he says, demand for organic items was growing strongly. But “now it is slowing down.”

Many Fair Trade products are also certified Organic, and could therefore satisfy demand for both lines. Still, says Baldwin, demand can be fickle. “I guess the tide could go up and down, depending of what customers ask for.”

1 Comments

  1. In recession all the business owner faces problems. They are not getting enough profit margins, as the business is running for the purpose of profit. The information you are giving to us is quite remarkable. Now the fair trade commodities supply increasing day by day, as the recession is now slow and study diminishes.

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